Micheal Medved, Like So Many of His GOP Bretheran, Fails on Economics

Micheal Medved, a conservative editorial writer for the Daily Beast, has decided that the tax system is unfair to wealthy people and argues that the federal government is taking too much from them, regardless of statistical information. I don’t know Medved’s motives, but it’s more than obvious that his assertions are incorrect. Here’s is my response to his editorial on the Daily Beast.

Mr. Medved, your editorial is a perfect example of the GOP pedagogical arguments of today. However, your and the current GOP rhetoric would be antithetical to the GOP presidents of the past, from GHW Bush back to Teddy Roosevelt. Even Pres. Reagan, who grew up as a small town kid in rural Illinois during the Depression and headed the largest actors union in Hollywood, recognized the need to pay our national bills and that government is the size that it is because that size, for any number of reasons, is what a plurality of Americans want. As a result, Reagan raised taxes three separate times. As Reagan’s Senior Domestic Policy Adviser Bruce Bartlett wrote, after Reagan failed to get a clean tax reduction bill – one not laden with exemptions, credits, and special interest deductions – through Congress, he chose to raise taxes because, he said, America had to pay her bills and reduce the deficit.

Reagan did not lay the burden of increased taxes at the feet of middle income, working families alone. It went across the board. Most responsible Democrats and Independents today feel the same. However, we have a tax code that discriminates against those who have not become wealthy and powerful.

Certainly, the wealthy pay in dollar denominated amounts a larger share of overall revenues, but their actual AGI tax rate is the lowest since the 1920s. Of the top 400 highest income earners today, the actual average tax rate is around 17%. Compare this rate to middle income earners who pay a tax rate of 25 to 30%. Moreover, due to the Wall St. caused financial market crash and ensuing Great Recession, a much larger percentage of middle income working families are living in poverty (estimated at 25%) or near poverty levels. Thus, these approximate 20 million families’ AGI has dropped so significantly that their incomes put them into the low or no tax brackets. Would you ask those who are barely surviving to forego food for their children to pay more in taxes so the uber wealthy, who have done extremely well over the last decade, pay a lower dollar amount?

Your argument smacks of the real class warfare, pitting your poor, abused uber wealthy against the real financial needs of hard pressed working families. What happened to old man J.D. Rockefeller’s religiously inspired statement, “to those whom God has given so much, so much is owed”? By the way, he was talking about taxes, not just giving to charities.

As for your preening public workers, I’d like you to tell my brother and late mother that their sacrifice of holidays, vacations, earned days off, overtime pay, etc. was irrelevant. As a budget analyst, my brother put in 60 hours a week or more, every week of the year, foregoing vacations, holidays, and family time to meet his work obligations. My mother did the same. Your broad bush stroke of every civil servant as lazy or irresponsible smacks of ignorance – or worse. While I can agree that the civil service system needs reform, the very idea that those who work hard and dedicate their time and intelligence beyond all reasonable measure and for much less than private industry pays should be considered leeches and denigrated reeks of partisan employment class warfare.

Moreover, your criticism of increased governmental expenditures for favored priorities like high-speed rail, wind farms, educational boondoggles, and other aspects of the “Winning the Future” (WTF) agenda connotes your partisan inability, or unwillingness, to look into the future, even though the markers are clear. As the CEOs of IBM, Siemens, Google, PepsiCo, and others have stated, if the U.S. does not make the investments necessary to compete in education, technology, infrastructure (including high speed rail and broadband), the United States will be left behind in global competition. Our closest competitors in China, India, and Germany are making these investments because they are looking to the future.

You, on the other hand, appear to look into the long dead past. For example, oil subsidies were needed to finance the development of this important new resource at the beginning of the 20th Century. But with rising global competition for limited supplies and increased unrest in oil producing nations, it makes economic and national security sense to wean ourselves off oil. Thus, eliminating subsidies to this highly profitable legacy industry and temporarily transferring those payments to new developing industries and technologies make economic sense. Just as the oil industry and railroad subsidies did in the latter 19th and early 20th Centuries. As Conservative David Frum wrote, subsidies should be used to foster new technology and growth industries, rather than supporting old industries.

The same goes for education. We need a highly skilled workforce, capable of understanding and using the latest technology if the nation is to compete globally. Yet, we have far too many students who either drop out of school before high school graduation or fail to pass minimum college entrance exams. I know; I used to teach these freshman college students many long years ago. They didn’t know a noun from a verb…and things have only become worse, in terms of global competition, in the ensuing years. Of course, if you really want a low third world educated workforce in the U.S., then improving education standards to compete with Singapore, China, Germany or India really doesn’t matter. However, if you really care about the U.S. and it’s competitive position in the world, then as most CEOs state, education is a big, important investment.

Finally, let me remind you that historically tax revenues average between 18 to 22% of GDP. Currently, tax revenues are at approximately 14% of GDP as a result of this recession. Moreover, with the retirement – often age induced – of the Boomer generation, tax receipts will lessen and expenditures grow. Thus, even conservative economists estimate tax revenues will need to grow to 22 to 24% of GDP for the next 20 years until the population age levels off. While it’s easy to say let’s drop the promises to people who have paid into the retirement system all their working lives to lower the taxes paid by the uber wealthy, these are the same people who saw their defined benefit company pensions ended mid-career for 401(k)s and who have not had the opportunity to save enough over the interim – or ensuing- years for their future needs. Ryan’s Ayn Rand-induced plan would throw these seniors onto the support of their children and grandchildren or onto the failing economic support of the states. As you should know from your previous career as a film critic, the pre-1930s lives of seniors without family support was pretty gruesome. In my own family, my great-grandparents had to move into my grandparents home in order to survive. Do single family households today want their parents living with them?

Social Security and Medicare made possible the single family household. As a nation are we ready to change this dynamic and return to extended family households, with grandparents, parents, and children all living together under one roof? Are adult children ready to shoulder the financial responsibility of their parents, especially medical responsibility? Because that is what the GOP plan requires. Currently uncovered medical expenses of a parent legally falls onto the children. Would you have it become even worse for struggling working families? Would you really have the nation return to the 19th Century?

Your ideas…and those of the majority of the currently elected GOP…are regressive to say the least. Their adherents, like you, would turn the nation back to a mythologically glorified time that never existed and against a future they adamantly refuse to acknowledge.

Your ideology fails for the Untied States as a whole. It serves only those who have no allegiance to the U.S., only to those who Chrystia Freeland, in an Atlantic Monthly article described as residents of the world: those whose lifestyles, homes, and politically national allegiance belongs only to their financial gain regardless of whether that gain is in Moscow, Dubai, Singapore, Hong Kong, or Mumbai. To them, the relative importance of the U.S. and its citizens holds little to no value. Their only concern is their own financial worth, like some giant Monopoly game wherein a person’s value as a human being is based solely upon his financial balance sheet and how much he earns, rather than upon his moral and ethical character.

So, to you I say in the words of the great social writer of the 19th Century Charles Dickens, “humbug!”